Page 8 University of Technology, Jamaica Notes to the Financial Statements 31 March 2020 (expressed in Jamaican dollars unless otherwise indicated) 2. Summary of Significant Accounting Policies (Continued) (b) Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course of the University’s activities. Revenue is recognised as follows: Government subventions Government contributions are recognized as income when received or deemed received by the University. They are deemed received if and when the Ministry of Finance, instead of giving cash, gives a binding written commitment to the University to settle certain of the University’s obligations. Subvention income is not within scope of IFRS 15 but is appropriately presented in accordance with IAS 20, Accounting for Government Grants. Tuition and hostel fees Tuition and hostel fees are recognized when the University satisfies its performance obligations over a period of time. The performance obligation corresponding to tuition and hostel fees is the delivery of the academic program and boarding throughout the stated period of the contract (academic year). Tuition and hostel fees are deferred when initially recorded at the start of the academic year upon a student completing the registration process for a school term or academic year. They are recognized as revenue evenly over the academic year in alignment with the time frame over which students attend classes and occupy housing, reflecting the assumed manner of consumption and delivery of relevant services to students. At the end of the reporting period, progress towards the satisfaction of the performance obligations is remeasured. The remaining performance obligation remains a contract liability on the statement of financial position, and revenue for performance obligation satisfied during the period is reflected in the statement of comprehensive income. Other fees Other fees are recognised as income as the service is provided. Interest income and expense Interest income and expense are recognised in the statement of comprehensive income for all interestbearing instruments using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the University estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. University of Technology, Jamaica 124
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